The deal calls for Actavis to pay $26.04 in cash and 0.3306 shares for each share of Forest common stock. That translates to a price tag of $89.48, representing a 25% premium on Forest’s closing price on Friday of $71.39.

The deal creates an “innovative new model in specialty pharmaceuticals leadership, with size and scale, a balanced offering of strong brands and generics, a focus on strategic, lower-risk drug development, and -- most important -- the ability to drive sustainable organic growth," Actavis CEO Paul Bisaro said in a statement.

Actavis said the transaction is expected to yield double-digit accretion to the company’s non-GAAP EPS in 2015 and 2016, annual free cash flow north of $4 billion next year and $1 billion in operating and tax synergies.

The combined company will be led by Bisaro, but Saunders agreed to join the Actavis board of directors and work with Bisaro following the close of the deal. As part of the deal, three Forest directors will be named to the Actavis board.